Mount Airy, North Carolina-based wire producer Insteel Industries reported Thursday net earnings of $0.9 million for fiscal Q3 2012, down substantially from $3.7 million in the period a year ago. Insteel cited narrower spreads between selling prices and raw materials costs, lower shipments and high unit conversion costs as the main reasons for the decline. Additionally, demand for the company's products was unfavorably impacted by the ongoing weakness in construction activity. Insteel's capacity utilization for the quarter was 44 percent compared with 46 percent in Q2 of fiscal 2012 and 48 percent in the prior year quarter.
Net sales for Q3 2012 decreased 5.1 percent to $93.6 million from $98.6 million in the same period a year ago. Shipments decreased 4.5 percent from the prior year quarter and average selling prices decreased 0.6 percent. On a sequential basis, shipments increased 9.7 percent from Q2 while average selling prices decreased 2 percent.
For the first nine months of fiscal 2012, net earnings were $1.0 million, compared with a net loss of $1.4 million in the same period a year ago.
Commenting on the outlook for the remainder of 2012, Insteel's president and CEO, H.O. Woltz III said, "We expect a continuation of challenging market conditions during the fourth quarter with depressed shipping volumes and highly competitive pricing. Although the private construction sector is showing further signs of improvement, the recovery is likely to be slow until there is increased and sustained growth in the overall economy that translates into meaningful job creation. While we are pleased with the passage of a new federal transportation bill, we believe the funding level appropriated and the duration are insufficient to spur a significant upturn in infrastructure-related demand. More likely, the legislation will serve to alleviate the recent downward trend in public construction spending."